Saxo Market Call Geopolitics and FOMC desperation to ditch the dot plot
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Jun 18, 2025 Tensions rise as the Israel-Iran conflict hints at prolonged instability, risking global oil supplies. The discussion shifts to the Federal Reserve's confusing rate strategy and how market prices may not align with actual policy changes. Insights on the U.S. housing market reveal vulnerabilities amid high mortgage rates, while inflation trends are examined through the lens of central bank actions in the UK and Switzerland. As geopolitical challenges persist, the podcast also teases an upcoming Forex webinar.
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Prolonged Iran-Israel Conflict Risk
- The Iran-Israel conflict risks extending due to Israel's maximalist goals of eliminating Iran's nuclear program entirely.
- This could imply direct U.S. military involvement and possibly regime change in Iran, creating prolonged geopolitical instability.
Fed Rate Cuts Pricing Misleading
- The market's pricing of Federal Reserve rate cuts this year likely misrepresents reality, with a bimodal outcome of either no cuts or aggressive cuts possible.
- The current forward guidance system of the Fed is outdated and may soon be abandoned, creating more unpredictability.
Watch Fed Rhetoric Over Dot Plot
- Investors should watch for the Fed possibly dropping the dot plot in the next 6 to 12 months as it becomes less favored.
- Focus should be on the Fed's statement rhetoric and Powell's press conference to gauge concern and rate trajectory rather than the dot plot.